Leasing companies vary by (1) experience, (2) industries they
service, (3) products and services, and (4) the flexibility and
completeness of their administrative process. Selecting the right
leasing company for you can be a very individualistic decision.
However, there are some general factors you might consider when
selecting any leasing company.
Whether you are a vendor, interested in offering leasing to
your customers, or an end user directly interested in leasing
software or equipment, many of the factors will be the same.
Vendors and their sales persons, however, may have additional
concerns that should be met. Those vendor specific concerns are
highlighted last.
EXPERIENCE FACTORS
- Years in Business. Experience is no
guarantee that any leasing company can provide the
benefits you are looking for from a leasing arrangement,
but the number of years in business is a gross predictor
that the leasing company can perform.
- Experience in Your Industry. Another key
factor to consider is does the leasing company have
experience in your industry. For example, LPI Software
Funding Group specializes in the software industry. We
are familiar enough with leasing in general that if a
customer needed to lease heavy construction equipment, we
could do that. However, we do not know much about that
type of asset. A leasing company with experience in
leasing heavy construction equipment might offer better
lease terms, better pricing, or flexible lease structures
because they understand the value of the equipment and
its value to the customer and the market.
- Reputation As in any other business, it
is critical to have a leasing company with a great
reputation as shown by references of its customers.
PRODUCTS AND SERVICES
In general, leasing companies offer various types of products
as defined by the types of leases they offer as well as services
they deliver. Consider the following product and service related
issues when selecting a leasing company:
- Do they offer either a finance lease or an
operating lease?
- Will they lease the type of equipment or
software that I want?
- Can I vary the lease payment over the term of
the lease or must the payment remain level over the term?
- Will they offer a balloon payment lease if I
need to reduce the monthly lease payment?
- Will they offer coterminous leases so that a
number of leases end at the same time?
- Will they offer rent holidays if I need short
periods of time without making any payment?
- Will they give me a preapproved lease line so I
can get additional software or equipment without another credit check?
- Will they handle any problems that come up with
the vendor?
- Will they disclose how they do their pricing?
- Will they give me a written proposal?
- Are there any conditions on their proposal?
- Are they familiar with the credit issues
relating to large and small companies?
- Will they only look more at my financial
statements?
- Will they talk to the CFO or other financial people to
understand any special financial issues?
ADMINISTRATIVE PROCESS
In order to complete any lease transactions, there are
generally a number of steps that must be undertaken. In selecting
the right leasing company, it is important to understand the
complete administrative process and ensure that the process,
while necessary, is not unduly burdensome to either the user or a
vendor. Specific questions you might consider are:
- Is the credit process quick?
- Is the lease agreement fair?
- Is the lease agreement understandable?
- Does the lease agreement disclose all charges?
- Is the leasing company flexible?
- Is the leasing company creative?
- Is the leasing company willing to make
reasonable accommodations in its lease or credit process to meet my
company's special requirements?
- Will the leasing company invoice in the manner I need?
VENDOR SPECIFIC CONCERNS
For vendors considering offering leasing through a leasing
company, you need to think about how you want the leasing company
to work.
- Will the leasing company accommodate you or
your sales people's needs?
- Will the leasing company work directly with
your sales people?
- Will they work with resellers?
- Do they provide telephone support?
- Do they have an e-mail system?
- Do they provide Internet support?
- Do they provide any type of training?
- Do they provide reports on leasing activity?
All these factors are important to consider in evaluating
whether a leasing company will provide sufficient levels of
services to your customers and your sales people so that the
leasing program provides you with the types of benefits you
anticipated.
February 27, 2006